War Hurts Tourism, But Not Like Sept. 11

MIAMI, March 31 (UPI) — The war in Iraq has delivered a blow to tourism, but industry researchers say mixed reports indicate that it isn’t likely to be as severe as the one after the Sept. 11, 2001 terrorist attacks.

Except for the troubled airline industry, there are no signs of job cuts or other major cost-cutting measures similar to the pull-back after Sept. 11.

Many businesses say they are more prepared for hard times and are leaner and more cost-efficient.

Still, Smith Travel Research in Hendersonville, Tenn., said hotel occupancy dropped nearly 5 percent and room rates dropped 4 percent in the first few days of the war.

Hilton Hotels Corp. revised its revenue forecast for the first quarter, estimating a 4 percent drop from 2002. For the full year of 2003 Hilton expects a drop of 1 percent to 2 percent.

PricewaterhouseCoopers revised its analysis of the war’s impact on tourism as hostilities began.

“Domestic travel and lodging demand will certainly be affected by the war and the related security warnings,” the report said.

It said that if the war lasts only 30 to 45 days, lodging will decrease by 4.9 percent or 126,000 occupied rooms per night, compared with the average over the past several years.

The projection, assuming a short war, gets more optimistic for the second half of the year.

“First, postponed leisure travel will recover just as the peak summer travel season begins,” the analysis said. “Summer travel under this scenario will surpass 1999 levels but will still remain 1.2 percent below the record level experienced in 2000.

“Second, the removal of geopolitical uncertainty will lead to a rebound in business travel as economic travel accelerates.”

Tia Gordon, spokeswoman for the American Hotel and Lodging Association, said recent numbers aren’t yet available and it was too early to tell. But unlike the days following Sept. 11, she said the feeling in her organization is optimistic.

“We don’t have any numbers, but as far as we know a lot of folks are still traveling,” Gordon said. “We haven’t seen any thing overwhelming as far as cancellations or postponements. A lot of people are sitting and waiting.”

She said many hotels have altered their cancellation policies making them more guest-friendly.

Air travel is expected to suffer the most, however, because of the industry’s already weakened condition.

Airline traffic in the first week of the war fell 10 percent internationally and 7 percent domestically, a report by the Air Transport Association said.

“As we outlined just a few weeks ago, the airline industry is in a seriously weakened state and now is beginning to buckle from the non-market blow being dealt by the war,” said James C. May, president of the association.

“The airlines have been making the tough decisions, necessary to cut costs, to cope with existing market conditions,” he said.

“But the war in Iraq, combined with domestic terrorism threats that keep the nation at Code Orange high alert, are non-market forces putting extraordinary negative pressure on demand.”

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